City Garbage-disposal Contract Probed By Federal Grand Jury

A federal grand jury is investigating a City Hall battle last year between Waste Management Inc. and a competitor for a lucrative contract to haul garbage from a South Side site.

A subpoena for corporate records of X-L Disposal Corp., the Crestwood firm vying against Waste Management for the contract, was issued by the grand jury that is investigating allegations of corruption in City Hall, according to an attorney for X-L.

In addition, Ald. Clifford Kelley (20th) said he was questioned in December by FBI agents about his leading the opposition to X-L`s use of a 6-acre site at 64th and State Streets for the contract.

Kelley is under investigation in connection with his dealings with Michael Raymond, an undercover informant in the 18-month investigation into allegations of corruption in City Hall. Kelley has said he received a $1,500 campaign contribution and $1,000 for a charity from Raymond.

Donald Reddicliffe, a spokesman for Waste Management, declined to comment on the investigation and whether that company`s records had been subpoenaed.

A City Hall lobbyist for Waste Management and close associate of Kelley`s, Raymond Akers, is reportedly cooperating in the federal

investigation after being videotaped with the FBI informant. Akers reportedly introduced Raymond to various city officials.

Officials of X-L have charged that Kelley led a campaign to block approval of a contract for the firm to lease the 6-acre site to the city for salt storage, a truck maintenance facility and a waste transfer station. The transfer station is where city garbage crews dump trash; it is then compacted and trucked to area landfills.

Waste Management had proposed a similar transfer station across the street from X-L`s proposed site. Even though the Oak Brook-based firm had proposed charging $1.65 a ton less for the disposal, city officials favored awarding the contract to X-L Corp. for $17.65 a ton.

Kelley said he told the FBI agent that among the reasons he opposed the X-L proposal was that ``this site was not needed`` and that residents of his ward had petitioned against it.

Both firms have been big contributors to Chicago politicians. Kelley received $1,000 in political donations and a $700 honorarium for a speech on the Middle East to Waste Management officials in 1984. His Democratic ward organization also received $2,500 from Waste Management several days after Kelley led the fight against the X-L proposal.

In 1981 and 1982, X-L contributed $6,500 to then-Mayor Jane Byrne when her administration was considering a waste transfer station at 9430 S. Genoa Ave.

Meanwhile, Waste Management is facing the prospect of losing more than $6 million in annual garbage disposal contracts with the city. Other firms were the apparent low bidders last month on two contracts previously held by a Waste Management subsidiary.

Waste Management joined with John Sexton Contractors, a Hillside landfill company, and the joint venture was the apparent low bidder last month on only one of the three contracts to haul and dispose of about half the 1.2 million tons of trash the city collects each year.

Kirsten Svare, a spokesman for the Department of Streets and Sanitation, said the new contracts, which will be awarded on March 31 and take effect on April 1, could increase the city`s garbage cost more than $2 million.

The city sought bids on disposal after a still-pending lawsuit charged that city officials had illegally extended a 1981 contract to Waste Management without seeking competitive bids. The lawsuit seeks to have the company repay the $5 million it has received from the city under the extensions of the contract.

Svare said the company had previously been charging the city between $13 and $19 a ton to haul the 600,000 tons of trash from three waste transfer stations. The new bids range from $17.89 a ton to $20.50.